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What is a hard money loan?

Hard money loans are predominantly asset-based, collateralized by the property in question. Investors prioritize the value of the asset over the borrower's credit and financial history. Although a borrower's creditworthiness plays a significant role in setting interest rates, loan amounts, and terms, the qualification for these loans is primarily based on the lender's specific underwriting criteria.

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What are hard money loan requirements?

• Experience is crucial in determining loan amounts, interest rates, and associated underwriting fees. Real estate investors who consistently engage in the market often receive greater loan leverage compared to newcomers.

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• Thus, partnering with seasoned real estate investors is beneficial for gaining expertise in property valuation, renovation, construction cost estimation, permitting, invoicing, evaluating licensed contractors, and ensuring compliance with building codes.

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• Having a clean criminal record can expedite the approval process for real estate investors. While some hard money lenders may disregard certain questionable aspects of a prospective borrower's background, these issues can sometimes cause delays in the loan approval process.

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• Finally, ensure you save at least 25% of the total project cost to commence renovation or construction as soon as your hard money loan is finalized.

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